05/05/2016

The European Biosimilars Market

In previous blogs, I have written about what biosimilars are and have speculated about the development of the US biosimilars industry. While the US biosimilars market may not fully mature for another decade, the European biosimilars market has been expanding for years. In this blog, I will analyze what the European biosimilars market looks like and whether it is a preview of the US biosimilars market.

The biosimilars market in Europe has existed now for over a decade. The first approved biosimilar was a somatotropin in 2006. Since then, Europe has seen 22 biosimilars emerge in several different drug classes (more information available here). With all the potential savings that biosimilars offer, 22 products may seem like a small number to be developed over a decade. Similar to the US, a barrier for biosimilars in Europe is the development pathway. The European Medicines Agency (EMA)which operates similarly to the FDA, provides the legal pathway for biosimilars. Unlike the FDA however, the EMA has made many different product specific guidelines which may be hindering the adoption of biosimilars. Additionally, the EMA does not provide pricing or reimbursement guidelines. This responsibility instead falls to each individual member state. Some member states like Germany and the UK have made pricing policies favorable to biosimilars. Germany has prescribing quotas and the UK has reimbursements for physicians. Others, like Italy and France, have policies that are less favorable in the form of universal price regulation. This regulation does not offer any incentive for the adoption of biosimilars. This mesh of product specific legal guidelines and member state specific pricing policies has slowed the biosimilars market in Europe.

Despite these challenges, biosimilars still offer great savings in Europe. Biosimilars can be as low as 30% less expensive than the European reference products. Even with the slow adoption, some reports show that biosimilars could save Europe as much as $33 billion by the year 2020. At first glance, it seems as though these savings would create an environment where all European member states would mimic the UK and Germany and embrace biosimilars. One might expect that over the next decade, biosimilar policy and use across Europe will look almost identical. History, however reveals that this may not be the case. It is no secret that biosimilars can bring savings to the health care, so countries that have not already adopted them are not guaranteed to adopt them in the future. What is likely is that biosimilars will continue to bring savings, but only to the handful of member states adopting favorable policies.

The European biosimilar experience is unlikely to be repeated in the US. The FDA may end up with a less cumbersome development pathway than Europe which could then lead to more rapid adoption. Individual states will also not have the same policy and reimbursement variability as European member states. In other words, policies in Pennsylvania will look similar to those in New York, while policies in the UK will continue vary greatly from policies in Italy. With that being said, the US biosimilars market will still be unpredictable. All Europe teaches us is that despite unique road blocks, biosimilars can still bring large saving to health care systems who accommodate them.